Standard Bank pays penalty of $32.8m over Tanzanian deal

November 30, 2015, 7:16pm

By Marvin Meintjies, Business Day Live, photo: Financial Mail  

LONDON — STANDARD Bank has been hit with a $32m fine in the UK in a case relating to the bribery of Tanzanian government officials.

In a landmark deferred prosecution agreement, the UK’s Serious Fraud Office (SFO) announced that Standard Bank would have to pay the legal costs of the SFO, amounting to £330 000.

Of the $32m fine, $25.2m will be paid to the UK government and $7m to the government of Tanzania.

A further “penalty of $4.2m has been agreed between Standard Bank and the (US) SEC (Security and Exchange Commission) in respect of separate related conduct”, the SFO said.

The deferred prosecution agreement means Standard escaped criminal prosecution.

The case relates to a $6m payment by a former sister company of Standard Bank, Stanbic Bank Tanzania, in March 2013 to a local partner in Tanzania, Enterprise Growth Market Advisors (EGMA). The SFO alleges “that the payment was intended to induce members of the Government of Tanzania, to show favour to Stanbic Tanzania and Standard Bank’s proposal for a $600m private placement to be carried out on behalf of the Government of Tanzania. The placement generated transaction fees of $8.4m, shared by Stanbic Tanzania and Standard Bank.”

The SFO said that on 18 April 2013, Standard Bank’s solicitors Jones Day reported the matter to the Serious and Organised Crime Agency and on 24 April to the SFO. “It also instructed Jones Day to begin an investigation and to disclose its findings to the SFO. The resulting report was sent to the SFO on 21 July 2014.

“The SFO reviewed the material obtained and conducted its own interviews. Subsequently, the director of the SFO considered that the public interest would likely be met by a DPA with Standard Bank and negotiations were commenced accordingly,” the SFO said.

Commenting on the outcome, Director of the SFO David Green CB QC said: “This landmark DPA will serve as a template for future agreements. The judgment from Lord Justice Leveson provides very helpful guidance to those advising corporates. It also endorses the SFO’s contention that the DPA in this case was in the interests of justice and its terms fair, reasonable and proportionate. I applaud Standard Bank for their frankness with the SFO and their prompt and early engagement with us.”